A Page From an Old Playbook

Hewlett-Packard has a tiny presence in the data warehousing business dominated by Teradata, I.B.M., Oracle and Microsoft, but is hoping to change the equation.

ASHLEE VANCE

AUSTIN, Tex. — Shortly after taking the helm of Hewlett-Packard in early 2005, Mark V. Hurd realized that, despite being one of the world’s leading technology suppliers, H.P. had an embarrassing and crippling technology problem.

There was no easy way for executives to get a picture of what was happening in the entire company.

Each unit of the Palo Alto, Calif., computer giant had its own systems for tracking information about crucial areas like inventory, component costs and marketing expenditures. No central system pulled all the data together into what Mr. Hurd liked to call “a single version of the truth.”

Mr. Hurd developed his passion for that quest during a previous job running the Teradata division of NCR. Teradata pioneered a technology called data warehousing, which allows managers to get a coherent picture of a company’s inventory, production, marketing and sales. NCR spun off the unit in October 2007.

With all of that information at their fingertips, employees can sift through and see once-hidden trends. Such technology helps companies like Wal-Mart Stores determine which shirt colors are preferred by people in Cincinnati, tells Best Buy what offers it should dangle in front of online shoppers in mid-March and suggests to Wynn Resorts which frequent gamblers should be coddled.

To Mr. Hurd, who rode his success at Teradata into the chief executive’s spot at NCR, data warehousing is a vital tool for making a business much more efficient. He had a few options for fixing H.P.’s information problem: buy Teradata’s products, acquire Teradata outright or have H.P. build its own data warehousing technology.

Taking a large risk, he chose the third option, encouraging H.P. engineers to meld decades-old technology inherited from the Compaq Computer acquisition with H.P. data analysis software to create a product called NeoView.

Mr. Hurd declined to be interviewed about H.P.’s data management strategy. But Randy Mott, H.P.’s chief information officer, said: “Mark made the assessment that he did not have the information he needed to run the company the way he needed to run it. So the assessment was that, as a company, we were going to have the technology needed to fix that.”

After testing NeoView internally at H.P., Mr. Hurd decided to sell it to H.P.’s customers — in effect, declaring war on his former employer.

H.P. has a tiny presence in the data warehousing business, which is dominated by Teradata, I.B.M., Oracle and Microsoft, with a number of smaller companies also getting in. In the last 18 months, H.P. has managed to sell only around 30 of its systems, according to Donald Feinberg, an analyst with the technology research company Gartner.

Some experts in the field say H.P.’s systems, built on expensive, older technology rather than cheap industry-standard components, are dated and too costly. NeoView setups can cost more than $10 million, placing H.P. at the wrong end of a technology that has been declining in price.

But H.P. is hoping that its recent $13.9 billion purchase of Electronic Data Systems, the data services giant, will change the equation. The reach of E.D.S. could lift Hewlett-Packard’s data warehouse consulting business. The company is telling corporate customers that its data warehouse technology, combined with an E.D.S. overhaul of their overall data processes, could save them a lot of money.

H.P. is also hinting that it intends to bring NeoView onto cheaper hardware and may rent space in its own data centers to customers instead of asking them to buy hardware. The rental model would complement something E.D.S. has specialized in for years: managing data centers for a large number of businesses.

In the current difficult economy, H.P. argues, companies need its product more than ever. “This is not a nice-to-have toy for some data analyst,” said Mr. Mott, who works in Austin, where two of H.P.’s data centers are located. “It matters more than anything else.”

Indeed, the idea of using technology to achieve the legendary efficiencies of companies like Wal-Mart or Dell is alluring to many corporations. Bon-Ton Stores, a retailer that purchased H.P.’s technology, has about 1,000 of its 32,000 employees digging into a NeoView database. Bon-Ton gathers information from 13,000 cash registers and feeds it into the data warehouse.

“We are using the tools to understand the most optimal use of every dollar we spend in the corporation,” said Jim Lance, chief information officer at Bon-Ton.

H.P.’s push into the market comes as other technology companies are also recognizing the growing importance of data warehousing. Oracle and I.B.M. are revamping their relevant products, while a host of start-ups have cropped up offering cheaper, faster hardware aimed at specialized tasks. Analysts think SAP wants to increase its reach in the market, possibly through an acquisition. Microsoft also signaled its intent to take this technology to the masses by purchasing the start-up Datallegro in July.

Teradata commends H.P. for presenting a relevant message at the relevant time. “What Mark and Randy are doing is the right thing,” said Stephen Brobst, chief technology officer at Teradata.

Mr. Brobst contends, however, that H.P.’s technology is too expensive and unproven. “We have not seen them in a deal in probably six months,” he said.

H.P.’s approach to data warehousing is based on database technology originally developed by Tandem Computers, which H.P. had acquired in the 2002 Compaq merger. The Tandem technology, called NonStop, occupies a lofty position in computing lore, running some of the most reliable computer systems ever made, including many at the world’s financial exchanges.

But NonStop was untried for data warehousing applications when H.P. first decided to enter the business. To prove it would work, the company’s own data centers became the guinea pigs. After working on the project for months, H.P. assembled a unified database that 30,000 employees could turn to for instant information about every aspect of the company’s business.

Now H.P. is using the experience of converting its own business as a selling point to other customers.

But H.P.’s data warehouse strategy revolves as much around personalities as it does technology. Mr. Hurd poached Mr. Mott from Dell just a few months after he arrived at H.P. Mr. Mott has been heralded as the master of data warehouse technology, setting up Teradata-based systems at Wal-Mart and Dell as chief information officer at those companies.

And in November, H.P. chose a former Teradata executive, Kristina Robinson, to be the head of a new unit, Business Intelligence Solutions. Ms. Robinson joined H.P. in mid-2006 and had been a vice president in H.P.’s printing group.

It will be Ms. Robinson’s task to sell this expensive technology in one of the most difficult economic periods in recent history, and develop the fledgling business.

To come from behind in this market, H.P. has turned to a hard-sell pitch that says customers can either model themselves after the revamped H.P. by adopting data warehousing or continue to be a mess.

“It’s the difference in my mind between winners and losers,” Mr. Mott said.

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